Rare Earth deposits: A simple means of comparative evaluation

April 23, 2014 07:55 AM


I have ranked 15 REE deposits that are well-known in the space and/or subject to our reader’s comments. This rating is based on 6 criteria of evaluation (discussed below) and largely subjective in nature as there is no precise way to compare multiple REE projects in a definitive manner. As such, I have based my ranking on a comparison of deposit attributes, and on discussions with experts in the REE space. Please take this ranking as a guide that is subject to change based on a project’s internal developments.

The following 15 REE companies:

#1: Commerce Resources Corp.

#2: Peak Resources Ltd.

#3: Frontier Rare Earths Ltd.

#4: Rare Element Resources Ltd.

#5: Tasman Metals Ltd.

#6: Great Western Minerals Group Ltd.

#7: Greenland Minerals & Energy Ltd.

#8: Arafura Resources Ltd.

#9: Matamec Exploration Inc.

#10: Namibia Rare Earths Inc.

#11: Quest Rare Minerals Inc.

#12: Avalon Rare Metals Inc.

#13: Ucore Rare Metals Inc.

#14: Texas Rare Earth Resources Corp.

#15: Geomega Resources Inc.   

A listing of these 15 projects and their ranking can be found in Table 1 (below) as well as a detailed project attribute listing in Table 2. The ranking of the 15 REE companies evaluated herein (Table 1 and Table 2) can be found in the full research report that is available as a PDF here.



Commerce Resources Corp.’s Ashram Deposit is at the top of my list due to its proven REE mineralogy and demonstrated mineral processing (>40% TREO mineral concentrate achieved), good grade, high tonnage, well-balanced REO distribution focused on the CREEs (critical rare earth elements), favourable economics, good jurisdiction, and a reasonable infrastructure development plan. I consider the Ashram Deposit to be the most balanced of any REE deposit in development, an overall quality I feel will be critical to the successful advancement of the project. Therefore, the Ashram Deposit receives the highest score of 27 points out of a possible total of 33. 

However, before we begin our detailing of ‘The Criteria’, allow me to mention some macro fundamentals first.

Anyone looking into the REE space in-depth may come to the same conclusion that this industry is more complicated than typical commodities like gold, silver, copper, or iron ore. Although the overall market is less than 200,000 tonnes of total rare earth oxide (TREO) per year, the need is critical in just about every facet of our technological (‘high-tech’, ‘clean-tech’) savvy lives, and therefore, is important to understand.  

Regarding the comparison of REEs to other commodities, one aspect that never seems to be discussed is, what effect would a new producer in the REE space likely have on the overall supply picture, and on the other projects in the sector?

A new copper or gold mine, for example, will increase global mine production by a relatively small amount, percentage-wise, and thus, have a negligible effect on the commodity price. However, a new REE mine which produces 20,000 tonnes REO/year, for example, could add ~10% to global production. This relatively large increase in supply will clearly have a negative impact on REE prices, unless the market is undersupplied with that specific element(s). This factor is also then exacerbated by the specificity of whatever the new REE producer is producing. 

This is the reason that an assessment of a deposit’s REE distribution is needed; which is to say that depending upon how many and which element(s) a project is enriched in, will determine whether or not the project is still economic after another project begins production in one or more of the same element(s).

Correspondingly, this is also the reason that REE deposits cannot decrease their unit costs of production through large increases in mine output, as opposed to porphyry copper deposits for example. Large increases in mine output would cause even larger increases in supply, further increasing negative pressures on REE prices.

The fundamentals of light rare earth elements (LREEs), heavy rare earth elements (HREEs), and critical rare earth elements (CREEs), with respect to supply/demand, are further discussed under the criteria of ‘REE Distribution’ as noted below.


The vast majority of present production is from China (>90%), and no major non-Chinese operations have existed in recent years with the exception of Molycorp Inc., and to some degree Lynas Corp. The REEs are not like iron ore, gold, or copper deposits where the metrics are easier to understand and comparative evaluation is more straightforward. There are factors that are comparative between all mining projects, but there are several additional factors that are specific to REEs and that play a dominant role in a comparative evaluation. 

Thus, this article will endeavour to layout some basic metrics and criteria for comparative evaluation of any REE deposit for the retail or institutional investor.

As with any commodity, basic criteria exist for evaluating a project’s potential and comparing to one’s peers. For an REE project, a simple method of evaluation may follow the logic of assessing the following criteria in order of decreasing importance: 


1. Mineralogy, Mineral Processing, Metallurgy

Does the primary REE mineral(s) have a history of processing/recovery (present or past), and has a >30% TREO mineral concentrate been achieved?

2. Tonnage and Grade

Is there sufficient tonnage present with appreciable grade to support a reasonable mine-life and production scenario? Is there a consistency of mineralization in terms of TREO grade, as well as ore and gangue mineralogy?

3. REE Distribution

Is there a favourable and balanced REE distribution present and dominated by the 5 critical rare earth elements (CREE) that are in the highest demand, yet shortest supply; namely, neodymium (Nd), europium (Eu), terbium (Tb), dysprosium (Dy), and yttrium (Y)?

4. Economics

Has an economic evaluation been completed on the project and were the findings robust based on demonstrated data results and reasonable assumptions?

5. Infrastructure

Is the project reasonably close to power, water, and road access and/or is its infrastructure development plan practical? 

6. Jurisdiction

Is the deposit located in a favourable jurisdiction? 

If a project ranks highly in all these criteria (i.e. well-balanced across each), then it is immediately at the forefront of the space, at least to my way of judgement. 



Mineralogy, and subsequent costs of mineral processing and metallurgy, will either stop you in your tracks or allow you to move forward and advance your REE project. This is the paramount criteria in assessing if a REE project has a reasonable chance of success.

As has been discussed in detail in our last articles, simple mineralogy (REE bearing and gangue minerals), and relatively low-cost demonstrated mineral processing and metallurgy is the foundation of success.

All currently producing hard rock REE deposits utilize a minimum 30% TREO mineral concentrate to operate (see following bubble charts). This not only requires a deposit that is amenable to low-cost physical upgrading to a mineral concentrate of sufficient grade, but also that the REE-bearing minerals present in the deposit contain high concentrations of REEs in their structure.

For example, if the REE mineral in a deposit contains only 10% TREO in its structure, it would be impossible to produce a 30% TREO mineral concentrate, even if the concentration process was perfect. It is important to understand that there are very few minerals that contain these high concentrations of REEs; the chief ones being monazite, bastnaesite, and xenotime, which are the same minerals that dominate commercial processing from hard rock deposits today, and historically.

It is also important to note that in many REE deposits, often more than one REE mineral contributes to a deposit’s TREO grade. In these cases, all of these minerals have to be separated to achieve an acceptable REE recovery and concentrate grade. However, they often do not all behave the same during physical processing. This is complicated further if co-products are also targeted (e.g. Nb, Ta, Zr). This is a fundamental reason why simple mineralogy is essential, if you have this then it is just easier, and cheaper, to separate and upgrade the ore to a mineral concentrate.

A good example of co-products complicating a flow-sheet is illustrated by Quest Rare Minerals Ltd.’s (Quest) recent release of a Preliminary Economic Assessment (PEA) on April 9, 2014, on the B-Zone that now replaces the Feasibility Study released on December 6, 2013.

I think Quest recognised that their project description (scenario) needed a very material revision for the project to be advanced; that being, production of a mineral concentrate. Although the PEA itself only lists design criteria essentially with limited actual test data, it is clear that Quest has made some improvements by achieving a mineral concentrate of about ~2.5% at reasonable recoveries I calculate (about a 2.5 times upgrade). However, in order to achieve this, the process flow-sheet had to be dramatically simplified by treating previous considered co-products (Nb and Zr) as waste, illustrating how a flow-sheet can be detrimentally complicated through co-products that require different process flow-sheets than the REE minerals. It is not easy to take a step back after so much effort has gone into to a mineral process flow-sheet, and I give Quest credit for starting anew in an attempt to simplify. In the end, I am far more interested in investing in a company that has simple mineralogy as this will more likely equate to simple processing.

Examples of deposits with complex or simple REE mineralogy are outlined in Table 2 at the end of this article. The B-Zone Deposit (Quest), Nechalacho Deposit (Avalon Rare Metals Inc.) and Bokan Mountain Deposit (Ucore Rare Metals Inc.) are good examples of complex, unusual, and unproven REE mineralogy, which leads to exceedingly difficult mineral processing and metallurgy. Now this does not mean that these companies will not succeed, it simply means that, for them to do so, the road ahead may be long, arduous, and more difficult than in comparison to peers that have simple and well-known mineralogy and that have demonstrated low-cost metallurgical successes, first and foremost the Ashram Deposit (Commerce Resources Corp.), the Steenkampskraal Deposit (Great Western Minerals Group Ltd.), and the Lofdal Deposit (Namibia Rare Earths Inc.).

We can also divide REE deposits into groups based on whether the host rock type has been a historic producing source of REEs or not. Apart from placer beach sands and the South China ion-absorption type clay deposits, only carbonatites have provided any significant source of REEs to the market so far.

I would like to comment further on this last statement with a quick note on the loparite mine(s) of the Kola Peninsula (Russia) and the Kutessay II Mine (Kyrgyzstan). I am not aware of any project in development that hosts loparite (REE, Ta, Nb) as its ore mineral and Kutessay II is a past-producing polymetallic mine (Pb, Mo, Ag, Bi) with REEs; a very unusual occurrence that had little impact on the world market during its mine-life (approximately 22,000 tonnes REO produced over 33 years). Neither of these occurrences are/were pure REE mines and arguably could not sustain (Kamasurt) or have sustained (Kutessay II) themselves without government subsidization or without the economic benefit of the other non-REE commodities present. 

With respect to carbonatite laterites, this host deposit type illustrates that favourable REE mineralogy is only the first step, as it must also be demonstrated that it can be economically separated from the host rock with an acceptable recovery.

This is evidenced by the technical difficulties of Lynas trying to put the high-grade, world-class Mount Weld Central Lanthanide Deposit into production, a carbonatite laterite, which has not yet approached the targeted production capacity. 

The subsequent series of bubble charts illustrate how vitally important it is for an REE exploration and development company to fulfill the following prerequisites: 

1) A mineral concentrate of appreciable grade (ideally >30% TREO as is achieved by current hard rock producers).

2) A deposit type that has been a source of historic production.

3) A primary REE mineralogy that has dominated commercially processing historically, and proven to be easily broken down to release the contained REE.  

As is clearly evident, the number of companies that fulfill these prerequisites is limited.


Simple, proven mineralogy that is amenable to low-cost mineral processing is the path of least resistance to production. From an economic perspective, there are far less unknowns in the processing requirements and costs involving proven minerals when compared to those that have never been commercially processed before. Sooner or later, the market will realize that complex mineralogy, along with unproven mineral processing and metallurgy, face significant challenges in terms of costs, which may turn out to be the cause of death of most REE development projects that many still consider promising. 

For this criterion, the Ashram and Steenkampskraal deposits score the highest with a considerable gap following. The B-Zone and Round-Top deposits score the lowest as they have not produced a viable mineral concentrate.


About the Author

Stephan Bogner (Dipl. Kfm. in Economics) is a mining and commodity analyst with Rockstone Research Ltd., an independent research house specialized in the analysis and valuation of capital markets and publicly listed companies. The focus is set on the exploration, development and production of resource deposits.